The information that the pair of investment funds – jointly known as KKRM – declined to provide Geon with the facility was revealed in a letter sent to creditors by Geon’s administrators, Philip Carter and Daniel Walley from PPB Advisory.
The letter said: "On 20 February 2013, [Geon director Jack] Crumlin informed Mr Carter that the companies' request for further funding of $3 million had been formally rejected by the secured creditor.
"On the evening of 20 February 2013, the directors and their legal advisor… met with Mr Carter. Philip Carter and Daniel Walley were appointed voluntary administrators by the companies at 7.45pm."
The director of one of Geon’s major suppliers, who asked not to be named, told ProPrint that his company had continued to trade with Geon in the lead-up to its collapse after being promised that a new line of funding was on its way.
“As far as we were concerned there was a new facility being put in place and that would get our account in line. We thought that for a month prior to the administrators being appointed.”
KKRM has since made it clear they would pour new money into the print group if they succeed in buying it out of administration, and may even cover old debts.
In a letter sent to paper merchants on Friday, Geon’s receiver, McGrath Nicol, wrote: "They [KKRM] have expressed a willingness to recapitalise the business and work with unsecured creditors on agreeing on go-forward terms, which would include options for the repayment of Geon’s pre-appointment debt."
The receiver also criticised the paper merchants' blockade.
McGrath Nicol’s Shaun Fraser wrote: “You have indicated that a pre-condition of continued supply is that your pre-appointment debt is paid in full. This is not possible. Any such ‘hostage’ payment would be at the expense of employees as that payment could only be made from circulating asset recoveries, against which employees have a priority claim.
“Additionally, that would put you at an advantage to other unsecured creditors. Given the potential position of employees those are demands to which I cannot agree.”
PPB’s letter also revealed that Geon started preparing for the worst last November.
"On 5 November 2012, [PPB’s] Philip Carter was contacted by telephone by [Geon’s] Jack Crumlin… who had concerns as to the solvency of the companies."
On 30 January, Geon told PPB Advisory that the board "had discussed some concerns that they had with respect to recently received financial forecasts".
On 31 January, Geon met with PPB Advisory "to discuss the financial position and options for the companies, which included voluntary administration".
On 31 January and 1 February, Carter and Walley "signed consents to act as voluntary administrators".
Between 1-15 February, Geon "provided intermittent updates… as to the progress of negotiations with the secured creditor".
The request for funding was rejected on 20 February and Geon called in the administrators.
The first creditors meeting is being held today (4 March). A second creditors meeting is due to be held by 25 March.
Carter and Walley estimated that PPB Advisory's fees would be up to $500,000.
[Related: Ups and downs of Geon]
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